Payroll and Benefits Guide - United Arab Emirates

United Arab Emirates
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Currency

UAE Dirham (AED)

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Capital

Abu Dhabi
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Employer Taxes

12.50%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

The UAE celebrates its National Day on December 2nd each year.

Dubai is the most populous city and a major global hub.

The UAE aims to send a mission to Mars, known as the Emirates Mars Mission or Hope Probe.

The Sheikh Zayed Grand Mosque in Abu Dhabi is one of the largest mosques in the world.

The official language is Arabic, but English is widely spoken.

The UAE has a zero-income tax policy.

United-Arab-Emirates

Contributions

Employee Payroll Tax

Contribution TypeRate
Social Security5.00%

Employer Payroll Tax

Contribution TypeRate
Social Security12.50%

Payroll

Payroll Cycle

The payroll cycle is generally monthly, with payments made on the last working day.

13th Salary

There are no requirements for a 13th-month salary payment.

Work Hours and Week

8 hours per day, up to 48 hours per week, Monday to Friday (during Ramadan, working hours are reduced by 2 hours daily). The UAE authorities have announced that for public sector employees, the working week will be reduced to four and a half days, with the weekend running from Friday afternoon to Sunday. The authorities have also confirmed that all schools and universities will operate from Monday to Friday on a four and a half day working day basis.

Overtime

All work above the standard weekly working hours is to be paid as overtime and is regulated by employment contract/collective agreements. In general, there are two rates of overtime due when overtime is worked. For nighttime overtime, between the hours of 9 pm and 4 am, overtime is calculated at 150.00% of the regular salary rate; with 125.00% for any other time.

For work on Fridays, the employee is entitled to an additional paid day off and overtime pay at the rate of 150% of the regular pay.

United-Arab-Emirates

Leave

Paid Time Off

Paid leave in UAE is set in the employment contract as a minimum of 30 days paid leave a year, following completion of 1-year service. For employment over 6 months but less than 1 year the worker accrues 2 days per month. This leave is in addition to any public holidays.

Public Holidays

The local government decides each year if holidays falling on the weekend are lost or moved to a working day in exchange.

Sick Days

All employees who have completed three months of service are entitled to paid sick leave up to a maximum of 90 days per year and must provide a medical certificate within 48 hours of the first day of sickness.

Maternity Leave

All female employees are eligible for maternity leave.

Employees who have completed one year of service are entitled to 60 days paid at 100% of the regular salary rate of pay for the first 45 days, reducing to 50.00% of the regular salary rate of pay for the remaining 15 days. Maternity pay is no longer reduced to 50% for employees who have not completed one year of service.

The employee can take maternity leave before and after the due date.

Employees are also entitled to take up to 45 days (consecutive or intermittent) of unpaid leave due to a medical condition related to pregnancy or delivery upon producing a professional medical certificate.

The new labor law confirms that employers may not terminate or threaten to terminate a female employee’s employment because she is pregnant or on maternity leave.

Paternity Leave

There is no additional paternity leave in UAE.

Parental Leave

There is no additional parental leave in UAE. For private-sector employees, both parents are entitled to 5 days’ paid leave. Employees may take leave until the child reaches the age of 6 months. The executive regulations have introduced a condition around parental leave, so that the employee will have to provide evidence of the birth of his/her child in order to be entitled to take such leave.

Termination

Termination Process

The termination process is standard in UAE and based on labor law requirements unless an employer can provide sufficient cause for dismissal without notice (due to misconduct, etc.).

Notice Period

According to UAE labor law, a minimum of 30 days mandatory notice period is required. The amount of notice period for employees who work under the DIFC employment law is determined by length of employment.

This can be as notice days to be worked or paid in lieu, as below:

  • 1-5 months of employment – 2 weeks’ notice
  • Up to 5 years of employment- 1 month’s notice
  • 5+ years of employment- 90 days’ notice

During the probation period only 14 days must be given; if a worker resigns during probation to move to a new company in the UAE they must give 30 days’ notice, however, if a foreign worker is leaving the UAE then they just need to give 14 days’ notice.

Severance Pay

A worker is entitled a severance pay after completing a full year of service.

The severance pay is as follows:

21 days’ wage for each year of the first 5 years of service and 30 days’ wage for each year exceeding such period. The severance pay for the time worked above a full year will be paid prorated.

The severance pay will be calculated based on the last basic wage the employee was entitled to.

Probation Period

Probation Period

Probation period may not exceed 6 months.

During probation, any party desiring to terminate employment during probation give at least 14 days’ notice, and where an employee is joining another UAE-based company, at least 30 days’ notice. Additionally, employers have the right to demand payment from the new employer for the costs incurred in hiring the employee.

Immigration

Any foreigners coming to work in UAE will need to be registered with the UAE immigration authorities. All foreigners must have secured a job offer from a company operating in the UAE, and some require specific qualifications that the Ministry of foreign affairs may require.

To work in Dubai, a UAE employment permit/work permit is required. In general, these are valid for up to two years for anyone offered a job in the UAE and provides the right to live and work in the UAE for the duration of the visa, which is renewable after two years.

VAT

The standard rate is 5%.